Three Cheers for Slovakia!

President Andrew Jackson is believed to have said that "One man with courage makes a majority." Well, let's hope this statement also applies to women. The incoming Prime Minister of Slovakia, Ms. Iveta Radicova, has the power to stop the corrupt and misguided European bailout scheme. At one point, Irish voters had the power to stop more centralization, bureaucratization, and harmonization in Brussels. Then the President of the Czech Republic had the opportunity to derail the movement to a socialist superstate in Brussels. In both cases, the forces of statism eventually prevailed. The bailout is a different issue, but the underlying issues are the same. Should nations have both the sovereign right to determine their own policies and should they also have the responsibility of dealing with the consequences of those actions? Here's a blurb from the EU Observer about whether Slovakia will save Europe from the political elites:

The emerging new leadership in Slovakia has said the country will not contribute its share of the €110 billion rescue package for Greece. In addition, Bratislava is likely not to add its signature to the €750 billion eurozone support mechanism - something that could put the entire project on ice. ..."It would be a serious blow to the EFSF and the euro area's ability to stand behind its members [if a member does not sign]," a senior eurozone official told this website. He explained that all 16 signatures on the document - which specifies provisions on how to issue loan guarantees if necessary - are required to bring the emergency mechanism to life. ...Conservative politician Iveta Radicova, the likely next prime minister, described the bloc's €750 billion rescue fund during the pre-election debates as "bad, dangerous and [the] worst possible solution." On Tuesday (15 June), Ms Radicova also re-iterated that she is against Slovakia providing any financial support to Greece.

Fiscal Centralization Will Accelerate Europe's Debt Crisis

David Ignatius continues his odd habit of drawing wrong conclusions from Europe's fiscal crisis. In a previous post, we made fun of one of his columns because he said America needed a value-added tax to avoid a Greek-style crisis. Yet since Greece has a VAT, he was, for all intents and purposes, arguing that we should copy Greece's policies to avoid Greece's problems. Now he has a column saying that Europe needs fiscal centralization to make the euro work. This is a rather interesting assertion since Ignatius comes from a nation that shows that it is possible to have a common currency with 50 different states with 50 different fiscal policies. Perhaps this is why he wrote an entire column on the topic without ever offering any analysis or evidence for his position. Here's an excerpt:

...there's a radical mismatch between the ideal of economic integration and the reality that the eurozone has 16 different fiscal regimes -- a disconnect that helped produce this crisis. ...With this crisis, [Italian President Giorgio Napolitano] argued, Europeans must finally accept that union "implies a partial transfer of national sovereignty." The current halfway integration simply isn't strong enough to support a common currency, he suggested. ...Investors keep pounding Europe in part because they don't yet see the mechanisms that will enforce discipline. The European Union just established a trillion-dollar bailout fund, but what happens when it runs out? There's a pledge to impose strict conditions on Greece, Portugal and the rest in exchange for loans, but it still isn't clear how Brussels will make this austerity regime work. ...What worries me is that the dictates of economics and politics are now in conflict in Europe. To sustain its common currency, Europe needs integrated fiscal policies that are enforceable on all members.

Given his reliance on empty assertions, let's step into the vacuum and make two observations. First, letting Greece officially default would have been the best way to enforce fiscal discipline. A default would have radically curtailed Greece's ability (and the ability of other European nations) to overspend by borrowing cheap money and leaving the bill for future generations. The bailout, by contrast, rewarded profligacy and sent a signal to other European nations that it is possible to over-tax and over-spend and send the bill to taxpayers in other nations.

Second, a centralized fiscal policy would exacerbate Europe's fiscal problems by creating a tragedy of the commons. The existence of a pot of money in Brussels would encourage every nation to maximize its share of the loot, in the same way that a bloated federal government in Washington subsidizes bad fiscal behavior by state politicians. It wouldn't matter whether the centralized fiscal policy replaced a portion of national budgets or (more likely) represented an additional source of government largesse. Europe's problems exist because too many people have learned to try to live off the labor of too few people. Another layer of government makes that problem worse, not better - especially since it would open up the possibility of having people from other nations bear the burden.

Three Cheers for Canada

Sleazy politicians from France, Germany, England, and the United States want a bank taxes that would finance national piggy banks to bail out politically favored companies and industries. But they are not stupid, so they realize that nations that impose bank taxes will lose deposits to nations with more sensible policy. This is why the statists want to convince all nations to adopt the same policy. Fortunately, some nations are resisting harmonized bank taxes, and Canada is taking the lead. Canadian leaders rightfully explain that their banks never got in trouble, largely because Canada does not have foolish housing subsidies. Let us hope that Canada, as well as other nations such as Brazil and Australia, block the corrupt policies being pushed by statists such as Obama and Merkel.

Canada will "resist" a bank tax, Industry Minister Tony Clement said Tuesday as ministers fanned out across the world to raise opposition to the proposal for avoiding another financial crisis. "Canada is, and will remain, opposed to a tax that would penalize financial institutions that remained strong and prosperous while many of the world's banks failed," Clement told a press conference with Foreign Minister Lawrence Cannon. ...Attempts to reach international agreement on coordinated bank taxes at last month's G20 and IMF meetings ran aground. Nations including Canada and Brazil, whose banking sectors emerged largely unscathed from the financial crisis, objected to the plan, favoring higher capital reserve requirements instead. But it is expected to be revived at the next meeting of G20 leaders in Toronto next month, with Germany's Angela Merkel vowing to press for the proposal supported by many in Europe. Clement said the bank tax would "encourage risky behavior" if it is used to create a bank bailout fund and "reward bad behavior" of those institutions responsible for the recent financial crisis in the first place. ..."This tax would reach into consumers' pockets and punish our financial institutions which have taken precautions to avoid the very turmoil that is afflicting other parts of the globe," Clement lamented.

Regardless of the Problem, the European Political Elite Thinks More Centralization and Bigger Government Is always the Answer

Greece is in trouble for a combination of reasons. Government spending is far too excessive, diverting resources from more efficient uses. The bureaucracy is too large and paid too much, resulting in a misallocation of labor. And tax rates are too high, further hindering the productive sector of the economy. Europe's political class wants to bail out Greece's profligate government. The official reason for a bailout, to protect the euro currency, makes no sense. After all, if Illinois or California default, that would not affect the strength (or lack thereof) of the dollar.

To understand what is really happening in Europe, it is always wise to look at what politicians are doing and ignore what they are saying. Political union is the religion of Europe's political class, and they relentlessly use any excuse to centralize power in Brussels and strip away national sovereignty. Greece's fiscal crisis is simply the latest excuse to move the goalposts. The Daily Telegraph reports that Germany and France are now conspiring to create an "economic government" for the European Union. Supposedly this entity would only have supervisory powers, but it is a virtual certainty that a European-wide tax will be the next step for the euro-centralizers.

Germany and France have [proposed] controversial plans to create an "economic government of the European Union" to police financial policy across the continent. They have put Herman Van Rompuy, the EU President, in charge of a special task force to examine "all options possible" to prevent another crisis like the one caused by the Greek meltdown. ...The options he will consider include the creation of an "economic government" by the by the end of the year. "We commit to promote a strong co-ordination of economic policies in Europe," said a draft text expected to be agreed by EU leaders last night. "We consider that the European Council should become the economic government of the EU and we propose to increase its role in economic surveillance and the definition of the EU's growth strategy." ...Mr Van Rompuy, the former Prime Minister of Belgium, is an enthusiastic supporter of "la gouvernement économique" and last month upset many national capitals by trying impose "top down" economic targets. Angela Merkel, the German Chancellor, has called for the Lisbon Treaty to be amended in order to prevent any repetition of the current Greek crisis, which has threatened to tear apart the euro.

The European Superstate Continues to Metastasize

Insanity is sometimes defined as doing the same thing over and over again while expecting a different result. On this basis the Euro-statists are clinically over the edge. They keep centralizing more power in Brussels and then they complain that European economies remain stagnant. On this basis, the new EU President must have escaped from the sanitarium, because he is asking for "economic government." This means, not surprisingly, more power for Brussels to harmonize and regulate in hopes of creating the imaginary nirvana of a competitive social model. But I have to admire the perseverance of the "federalists," as they are known. Every time they expand power, such as the recent Lisbon Treaty (basically a sanitized version of the statist EU constitution), they claim that they don't intend to push for more centralization. Yet the ink is barely dry on one agreement before they start pushing for more powers. You would think European citizens would wake up to this boy-who-cried-wolf scam, but since the "European project" is fundamentally anti-democratic, most of them have ceased paying attention.

The European Union's new president, Herman Van Rompuy, is calling for an "economic government" for the bloc, with closer policy coordination and financial incentives for good performers. ..."Whether it is called coordination of policies or economic government," only the European nations working are "capable of delivering and sustaining a common European strategy for more growth and more jobs," he underlined. ...The evocation of a European "economic government" will please France which has lobbied in this direction for years without success. ...Thursday's summit will also will also prepare the ground for a new EU economic strategy, focussing on investing in research, innovation and the green economy. This will replace the bloc's Lisbon Strategy launched in 2000. The ambitious Lisbon Strategy was supposed to make Europe's economy the most competitive and dynamic in the world. It failed to do so and Van Rompuy was happy to bury it. ...For Van Rompuy it the matter is urgent and strikes at the very heart of the European project. ..."Our structural growth rate is not high enough to create jobs and sustain our social model," he warned.

Call the Language Police! Sometimes the French Oppose Harmonization

The French government is relentlessly awful in its support for tax harmonization, regulatory harmonization, and other policies to drag other nations into the cesspool of statism. But France's desire for a one-size-fits-all approach miraculously vanishes when it comes to language. Even though English is now the world's language, especially for commerce, the French are resorting to coercion and protectionism to protect against - gasp! - English words. I greatly enjoyed this WSJ column about France's fight against modernity:

A French group entitled Avenir de la Langue Française (Future of the French Language) has claimed that the invasion of English words poses a greater "threat" to France's national identity than the imposition of German under the Nazis. Writing recently in Le Monde and l'Humanite, the group, supported by eight other patriotic organizations, has called on the Sarkozy government to turn back the English flood. "There are more English words on the walls of Paris," they state, "than German words under the Occupation." ...English has became the dominant language of the Internet, air traffic control, computers, international business and by 2030 more Chinese people will be able to speak it than there are Americans. Already by 2001, English was being spoken by more than one in three of the 350 million citizens of the European Union, whereas fewer than one in 10 spoke French outside France itself. Even in those areas where French influence has been strong —Morocco, Algeria, Syria, Vietnam, Cambodia, Chad, and elsewhere—English has encroached very successfully. English is the official language used by the Organisation of the Petroleum Exporting Countries, and the only working language of the European Free Trade Association, the Baltic Marine Biologists Association, the Asian Amateur Athletics Association, the African Hockey Federation, while it is the second language of bodies as diverse as the Andean Commission of Jurists and the Arab Air Carriers Organization. ...France's traditional response to this linguistic "Anglobalization" has been to attempt a form of legal protectionism against the steamroller tongue of "les rosbifs" and "les Anglo-Saxons". In 1994 the French Assemblée Nationale passed the Loi Toubon, which was signed into law by President François Mitterand. Named after Jacques Toubon, the culture minister, it stipulated that "French shall be the language of instruction, work, trade and exchanges and of the public services. "The use of French shall be mandatory for the designation, offer, presentation, instructions for use, and description of the scope and conditions of a warranty of goods, products and services as well as bills and receipts. The same provisions apply to any written, spoken, radio and television advertisement" and so on for another 21 highly prescriptive clauses. The law has been used against American and British companies, such as Disney and the Body Shop on the Champs Elysées that had labels in English. ...In two centuries, French may have to be protected as a linguistic curio, like Britain does with Cornish or Manx. Until then, the French must learn to be bilingual, or risk being left behind in the global market-place, gasping outraged complaints in a tongue fewer and fewer people understand.

Bad News from Prague

Last month, this blog noted the bad news from Ireland, where voters were bullied into endorsing the so-called Lisbon Treaty to create a bigger and more powerful European Union bureaucracy in Brussels. Now, the last obstacle has been cleared as Czech President Vaclav Klaus has signed the pact. The Euro-crats in Brussels are overjoyed, but this agreement will mean more bureaucracy, more centralization, and more harmonization. It also makes the EU even more anti-democratic. Reuters reports:

Czech President Vaclav Klaus signed the European Union's Lisbon Treaty Tuesday, bringing into force the EU's plan to overhaul its institutions and win a greater role on the world stage. Klaus was the last EU leader to ratify the treaty and his signature, coming after the top Czech court cleared the pact, means the bloc of nearly half a billion people can pick its first-ever long-time president and a more powerful foreign representative.

A Continent-Wide Tax Would Hasten the Downfall of Europe

What is now known as the European Union started as a free-trade area, which is something to be admired. But over the decades, the free trade area has mutated into a statist super-bureaucracy pushing for centralization and harmonization. Now, according to leaked documents, the collectivists in Brussels want to impose a direct tax. This would be on top of the already onerous tax systems imposed by member nations. Needless to say, one hopes that one of the 27 nations will use its veto to stop this terrible idea. That would seem to be a simple and obvious task, but the vast majority of politicians in all European nations are terrified of being called anti-European, so even awful ideas become very plausible threats. The UK-based Daily Express reports:

Secret plans to seize more than £4billion a year from Britain and make its citizens pay taxes direct to Europe emerged last night. The leaked proposals, seen by the Daily Express, ...would...mean Brussels being given the power to dip straight into taxpayers’ pockets. Shadow Europe Minister Mark Francois vowed they would be resisted by a Tory government. He said: “The idea of an EU tax is a non-starter. ...Possible taxes suggested in the report – which could be discussed as soon as the start of the European summit in Brussels tomorrow – include levies on phone calls, flights, financial transactions or carbon emissions. ...Matthew Elliott, chief executive of the TaxPayers’ Alliance, branded the idea of direct taxation from Brussels an “outrage”. He added: “Control of taxation must rest solely in the hands of democratically elected politicians who answer to British taxpayers. “The EU has shown time and time again it is greedy for power. This is another sign they will never stop trying to grab it.”